Welcome to episode #11 of the Fiduciary U™ podcast. My guest today is Katherine Roy, who is Chief Retirement Strategist for J.P. Morgan. In this role, she is responsible for delivering timely retirement-related insights to financial advisors and has focused on the retirement income-related landscape for more than 15 years. Katherine specializes in identifying themes, strategies and solutions that can help advisors successfully partner with individuals in the transition and distribution life stages, and she's a top speaker at major industry and firm specific conferences and events. I think at the end of this episode, you're going to understand why.
On today's episode, Katherine shares her insights from J.P. Morgan's research like their Guide to Retirement, as well as findings from their collaborative efforts with the Employee Benefit Research Institute (EBRI) around spending and savings behavior of American households. We discuss retiree spending behavior patterns, sequence of return risk, the impact of health care costs on retirement income spending, the role of guaranteed income for plan participants, and retirees, and how plan sponsors and advisors can redesign the participant experience to incorporate retirement income tiers that meet the evolving needs of participants who choose to stay in plan, post-retirement.
I really enjoyed this conversation with Katherine. She's super sharp, and has a tremendous working knowledge of the retirement issues and challenges facing American workers, which she communicates in a really practical, understandable way. So, with that introduction, I hope you enjoy this episode of the Fiduciary U™ podcast.
“Americans know what they’re retiring from, but they don’t always know what they’re retiring to.” - Katherine Roy
"The day you retire is your biggest risk day, because that's when your wealth is typically greatest." - Katherine Roy
“The 4% rule is a rule that I love to hate.” - Katherine Roy
"We really do believe that a guaranteed solution or protected income, particularly for individuals who only have social security, is going to be important. And, we see that in our data." - Katherine Roy
"We see a tremendous amount of spending volatility in retirement which really surprised us." - Katherine Roy
Josh Itzoe: Katherine Roy, welcome to the Fiduciary U™ podcast. Thank you so much for being a guest today.
Katherine Roy: Thank you for having me. I'm thrilled to be here.
Josh Itzoe: Well, I'm looking forward to a really interesting discussion and one, all my listeners and audience can glean your insights. I was saying before we started recording, that I think you might have... No disrespect to any of the previous guests, but I think you might have the coolest title of anybody who's been on the show so far as Chief Retirement Strategist at J.P. Morgan. So, what does that look like? Where do you spend your time focused on, day-to-day, as Chief Retirement Strategist?
Katherine Roy: Yeah, sure. It's actually a name, or a title that I gave myself. When I joined J.P. Morgan, obviously, I'm doing retirement research and training for advisors and investors... Anything retirement-related across the spectrum, so whether it's 401(k), all the way up to the individual advisors that are working with clients. What I found is that, our organization, as well as in the industry, understands what a market strategist says, and a Chief Market Strategist who's now talking about the markets in the economy. So, what I wanted to do is, find a name that could be analogous to that. So, Chief Retirement Strategist really, I think, hit the nail on the head, because essentially, I'm doing the same thing. I'm thinking about, and researching with my team, themes, strategies, issues, concerns, questions that come through on all the different retirement-related topics and deliver insights directly back.
Josh Itzoe: That's great. I think it's also... That's like a boss move when you give yourself your own title.
Katherine Roy: Yeah, I had to at some point in my career, right, we all aspire to do that.
Josh Itzoe: That's it. That's super cool. One of the things you had mentioned was, the research that you and your team do, and somebody who has been in the industry for a long time, and who pours over lots of data and research and sometimes feels like, I'm inundated with it, and I think many other advisors feel the same way, I do think that you guys at J.P. Morgan., especially your team, you put out some of the best research that I've seen. It's one of the things, I think, that you guys do is the, there's the guide to the markets, but the guide to retirement, which is every year, I think, one of the best resources and really, at the end of the day, puts the right ideas and best practices and research in the hands of the practitioner base, if you will, that they can implement that.
I want to spend time today talking about some of the research you've done around the participant experience and retirement for retirement plan participants and investors. You've done a lot of research and analysis on retiree spending, as I read some of your stuff. One of the things that was interesting was, that you broke down and delineated between spending behavior and something called the spending curve, the spending surge and spending volatility, to really, I think, outline the life cycle of when somebody leaves the workforce and has to start to generate their own income. They're not getting a paycheck, what that looks like. Could you describe each of those and why they're important?
Katherine Roy: Sure, I think, one of the big advantages we at J.P. Morgan. is that we are part of a bank that has banking and lending relationships with half of America. So, one of the data assets that we're able to tap into, which I have really enjoyed doing over the last five years, is this idea of spending behaviors. When we think about retirement plans, plan sponsors, from a J.P. Morgan. perspective, our goal is to help as many participants get across the finish line as we possibly can, reflective of their actual behaviors. So, we've done over 20 years of research on just the saving and withdrawal experience and investing experience. But, what we hadn't really been able to X ray into, is that liability side once they transition into retirement. What does that actual spending look like? We've all, I think, done income replacement research that highlights 70 to 80%, generally, is where people need to be.
Then, candidly, we assume that's a static, and grows with inflation type of a number. So, what was really eye-opening to us, five years ago, and we started to look at both of the consumer century survey data, which shows clearly, but then also factoring in the different profiles of participants and household wealth levels, etc., that spending is very different than what I think we've always assumed it to be. It doesn't stay constant, you don't buy the same basket of goods from 65 to 95. You don't even buy the same basket of goods for 25 to 45. So, that's really where that first insight comes in, in terms of spending curve. What we see is, as households income rises, unfortunately, their spending rises right along with it. So, that's where auto-escalation is so important to interrupt that natural trend.
We see that spending peak in people's early to mid 50s, when their income candidly also peaks, and then you see a decline in real terms, really, for the remainder of their life. Part of that is because children and spouses leave because we're looking at cords of data. And, that really defines often the steepness of that decline in real terms. But, we do know that household sizes that are constant also see older people spending less than younger people and spending differently. They're spending more on health care, but they're spending a whole lot less on apparel, and transportation and those types of things. So, the curve really is just saying, look, at one point in time, you have that curved look over your life cycle that we need to factor in.
So, what that means for post-retirement again, is, the traditional... Whether we're calculating retirement preparedness, or planning tools available for 401(k) websites, usually that participant puts in, this is what I'm spending today, and then we grow it by an inflation factor that's missing this behavior, this idea, I'm, actually, in real terms, going to spend less. Now, spending still goes up because inflation still happens to people, but we have to kind of handicap it a little bit-
Josh Itzoe: In actual real dollars, it goes up, but in terms, as a percentage, it goes down.
Katherine Roy: Yeah, so in real... All we do is, from a real perspective, the behavior is to spend less at those older ages. So, what we factor in is, okay, all the unknown... We basically rebuild the basket and say, okay, apparel grows 2.6% compared with health care that grows at 4.8%. You're going to buy less clothes, so we see a 3% decline in older people spending on clothes, but we see a rise in how much they're spending on health care. So, we kind of, rebuild the basket, grow it by the underlying inflation factors by each subgroup, and really get to about a 1 to 1.5% inflation rate on spending, post-retirement, which is drastically different than the historical inflation rate of 3%. It's about half, right? So, the liability isn't growing as fast because again, that behavior is handicapping some of that growth.
Josh Itzoe: Well, and it begs the question, are financial advisors and financial planners, too conservative in their planning assessments? At the end of the day, it's partly art, it's partly science, but your inputs are going to determine your outputs, right?
Katherine Roy: Right.
Josh Itzoe: So, do feel like, based on your research, is the... We always hear, and quite frankly, I would buy into this, that we have this retirement crisis. But, would you say that perhaps a lot of the rules of thumb which often are a one size fits none approach... Do you think they may be overstate the severity of the retirement crisis for many people in America? Are people better off, perhaps, then what our Monte Carlo analysis tells them if you will.
Katherine Roy: I think it's a scenario that people should run, right. I always try to encourage a lot of what if scenarios, to understand, look... Retirees understand what their current lifestyle is, so I think it's easy for them to understand, okay, if you live this current lifestyle, for the rest of your days, this is your outcome and what that looks like. Now, let's look at how people actually behave. I think, talking to participants or talking to investors about the fact... And, I think, intuitively, they feel it. I'm in my mid-40s, and, I know, when my kids leave, I'm never skiing on Presidents Day weekend ever again. I'm never going to do these things now, because I'm not going to need to, and I'm not going to want to, right.
So, I think, people naturally feel that they're likely to make changes in their spending. So, overlaying that and showing what that outcome is. We want to be conservative. So, I think running that scenario with inflation, helping people gauge, that's important. But, the downside, though, is it's not just the assumption of those inputs that you mentioned and highlighted as risky... Or, I shouldn't say risky, overstating. But, it's also how our tools work. So, what are tools typically do and this is particularly true for plan participants for whom all they've saved into is a tax deferred plan. If you are late in that forecast, pulling money out of a tax deferred plan to meet those lives, to overstate the lifestyle costs, they owe more in taxes. Then, it's going to go back into the IRA or the 401(k), and it's going to pull more money out and they're going to owe more in taxes.
So, it's exacerbated by the fact that usually late in our forecast, people are concentrated or only have tax deferred assets. So, the combination of that overspending forecast and the tax implications, of pulling money all out of a tax deferred account, I think, exacerbates the likelihood of success that we are showing participants, as being-
Josh Itzoe: Yeah, you have to take out a higher amount, right, to account for taxes to be able to net the amount necessary to meet whatever that spending liability is.
Katherine Roy: Exactly.
Josh Itzoe: I hear you. I have four kids, so I'm either never going to retire or I'm halfway to my own reality TV show and I'll be on Easy Street.
Katherine Roy: Yeah.
Josh Itzoe: That's my retirement strategy. I'm just going to diversify amongst my kids and my wife, and I'll spend three months with each of them.
Katherine Roy: Yeah. So, in terms of those other insights that you mentioned, it's one thing to look big picture and just say this is the overall trend of how spending plays out. What we want to do is, get really smart about what actually happens around retirement. Back to this 70 to 80% replacement, back to sequence of return risk. There's a lot of things that happen at retirement that we want to be smarter about what people actually do. So, one of the things we've been able to do in our data set is, we have about six to eight years worth of histories... We're building it up, and hopefully we'll eventually have a whole post-retirement lifecycle.
But, we're able to identify within this de-identified database... I should have been very clear up front, we obviously take privacy very seriously at J.P. Morgan. we have a very strict process by which we get access to this data, and it's all de-identified and rolled up, so we can't find any individual person. And, as a result, we have no ability to-
Josh Itzoe: Compliance is very happy that you just dropped that disclaimer. So, check that one off.
Katherine Roy: Check that disclaimer. But, we, obviously, can't reach out... We couldn't reach out to you, Josh, and say, Josh, are you retired or not? That's obviously not a data element that typically is available in a bank. So, what we can do is, we can observe the types of income flows that start or stop to hitting a person's bank account, assuming they're doing most of their banking with us. So, we can see payroll collection or payroll transfer stop, we can see Social Security start, annuities, pensions, etc. So, what we've done, within our data set, is we found about 120,000 in households, that we observe a source of retirement income starting. So, we see social security and annuity or pension. Then, we're able to look before and after and say okay, assuming that retirement income collection signifies the transition of that household and retirement, what does the spending look before and after?
What's really interesting is, as an overall population, we see a spending surge. So, that's the second big insight, is that households tend to either be surging into retirement. So, they're getting everything ready, they're buying that car that they're going to have, they're doing all their dental work while they're still working for their employer. So, they're ramping up into retirement. Then, it looks like some households do it the year after they retire. They've got newfound time, they're getting all this stuff in order. But, the byproduct of that is this surge that happens. Obviously, the more wealth people have, the more they surge, but it's really consistent across all participant levels. So, where we get concerned is obviously, if you retire into a bad market, the idea of surging while you're experiencing poor returns in the market, really, can exacerbate sequence of return risk, so we want to make sure that participants and plan sponsors are aware of that behavior and taking steps to mitigate that.
Then lastly, we see a tremendous amount of spending volatility in retirement which really surprised us. So, again, I think with a rule of thumb, Katherine Roy's Spending, just, round number, $100,000, before she retired. We would expect Katherine to settle in, in her first or second year at 70 to $80,000, and, happily, spend at that rate through retirement. We don't see that at all, we see only about one in five households staying plus or minus 20%. So, 80,000, in that example, up to 120,000, staying in that lane for the three years after they retire. Only one in five. We call them the steady Eddie's. But, we see 56% of households really all over the place. They are either spiking in particular years and coming back into the swim lane. Candidly, we have 10% that never hit the swim lane. They're either permanently upshifting or permanently downshifting. But, what's more typical, is this vacillation of volatility that we see around retirement.
So, that, for us, suggests, a couple things. One, it really does highlight this theme that we see that Americans often know what they're retiring from, but they don't really know what they're retiring to. So, they look like they're floundering in terms of how to go from being time poor, to time rich, which has implications for how much liquidity they need to have harvested and available, so they have that flexibility. This idea that the emergency reserve fund really doesn't stop when you get to retirement. I think we've always talked about where your emergency reserve fund becomes your cash cushion, or your funding for your first couple of years. Really, you're going to need that emergency reserve fund until you're, at least, at a high level until that volatility settles in, and you have a better sense of what your spending is going to be ongoing.
But, we all know that medical expenses and other volatility comes later in retirement. So, really maintaining that through time, is going to be important. Because, what you don't want to do is, surge and have volatility when you're having challenging markets and need liquidity at that point in time.
Josh Itzoe: Yeah. So, what are some of the strategies? I think that's a great sequence of return risk. I think we're starting to hear more about, certainly, the way markets have been the past few years. You probably hear less about it. But, just because it's... If you've retired in the past few years, you obviously retired into a pretty good market overall. In our private client practice, we often tell clients that, actually, the single riskiest day in their entire life is the day they retire. With each additional day, right, risk goes down a little. It's declining, right. That risk liability, if you will, is declining.
With sequence of return risk, we hear so much about... And, this is the challenge with, I think, communicating with just vast swaths of participants all with different meanings and different levels of sophistication. But, sequence of return risk... How should retirement plan participants, investors, advisors who are helping these folks... What are some strategies that you would recommend in terms of how to guard against that sequence of return risk, and those first really three years is what it sounds like, is that spending volatility is all over the place in the swim lane, maybe, in three to five years settles in? What are some strategies to guard against that really risky time?
Katherine Roy: So, I think, sequence of return risk, obviously, to your point, I completely agree that the day you retire, is your biggest risk day, because that's when your wealth is typically greatest. So, obviously, if you have negative returns, you're applying that to the biggest balance that you have. And, that's going to really impact your wealth for the long-term. So, the strategies that we typically talk about is, one, having the right level of risk. So, we've been talking since 2018, as many participants and investors were concerned about what's going to happen next after such a bull market. The idea is, that you really need the right risk. You need to make sure you have the right risk level for where you are in your life cycle.
What we find is, that the Do It Yourself investors in plans, older participants tend to carry much higher equity exposure than most target date funds would support or would think is prudent because de-risking in advance of retirement, both drawing on your portfolio, but also having all of that wealth at risk is really going to be important. So, we've done research in line with some of the... Researchers looked at the U-shaped path. Right, this idea that you actually... Instead of just gliding through retirement being flat, you actually should de-risk as much as possible and have very little in the market as you are at that point where your wealth is greatest and then we re-risk on the other side, five years in.
Josh Itzoe: That rising equity glide.
Katherine Roy: Yeah, that rising—
Josh Itzoe: A guest on the show, as well, I know he's done quite a bit of research, which flies in the face of what we traditionally see, right, with these target date funds, that the glide path declining. This idea of a rising equity glide path after. But, the research is actually fairly compelling when you read it and you look at it. It just challenges conventional wisdom, if you will.
Katherine Roy: Yeah, it really does. When he wrote that initial paper, the feedback I felt at the time, before we ran our own numbers was, one, yes, it marginally improves the outcome for participants, particularly for those participants who experienced challenging returns early in their retirement. That's really where that rising glide path is going to really help them recover. The downside of it, that putting it into practice, which I'm sure you would agree with is, we know that as individuals or participants get older, their desire to take risk is on the decline. They want to take less and less risk as they get older. So, that coupled with, okay, I had a really rocky start to retirement and to improve my outcomes, now I'm going to re-risk the combination of those two. I just don't think in practice, really, can be done.
So, I think, what we've tried to do would be prudent or would be on the retail side, would be suitable. I think, if you talk about raising an 80-year olds equity to 70, or 80%, that's really not going to fly there. So, we've reached, I think, a happy middle, right, in terms of, we glide down to about 40% in our target series. We buy down to about 40% equity exposure, and we stay at 40% through the remainder of retirement because that's really de-risking as much as we think is prudent for the liability that that participant has for the next 30 or 35 years balancing then, at a suitable amount of risk, understanding that they're less risk seeking over times. We tried to find this happy medium of the level of risk we feel comfortable with, balancing that participant desire to take less risk over time. So, I think that's one, right, risking is important.
Diversification is really important. Our long-term capital market assumptions have come out. If you're only going to be in the US and not well-diversified, you're really going to take a return hit there and be potentially more volatile. So, we think, just having... Continuing to have a well-diversified portfolio, can be really important, and can help mitigate some of that volatility as well. Then lastly, candidly, protected income or annuities, are a great strategy to allocate to, really, within those five years of retirement to protect a portion of your account balance, and make sure that it's at least not being subjected to some of the market volatility, and locking in guaranteed income or long-term is another strategy to be thinking about. So, whether it's an annuity that simply protects your principal for a period of time to help you get through those five years before, five years after, or whether it is one that's helping you buy more retirement income over time, is another strategy to think about.
Josh Itzoe: I think it's interesting what you're saying is, is that, really, the complexity of this, it's multivariate and your streams of how you replace income that... Obviously, some folks, they're going to have one account... It's their 401(k) account, let's say. But then, they have social security income and strategies around that, but it really... This is where the need to really be able to layer different strategies together and weave them together and sequence them differently.
I worry, at times, in the industry... And, I realized the need to... You want to simplify. We want to simplify things as much as possible. But, sometimes I think that, that conveys a false sense to people. They think that this... Things that are simple, aren't always easy. So, I wonder at times, and you talked about this protected income... We'll get into this in a little bit just in talking about things like the Secure Act and guaranteed income solutions and whatnot. One of the strategies that we often hear that has been co-opted as retirement gospel, is this 4% rule, right? Is that essentially, you can generate income using 4% of your assets and the probability of your money lasting 30 years, is really high. Now, that was an independent RIA, Bill Bengen, who did that study back in 1994. I think he wrote a paper about it. Again, it's been co-opted. That's what we tell everybody, 4%.
I guess my question is... And, I often worry about rules of thumb, because I think they can be very dangerous. But, what do you think about the 4% rule? How do you think it's performed? And, do you think it still has validity and applies in 2020 and beyond?
Katherine Roy: The 4% rule is a rule I love to hate, exactly for the reasons that you've laid out. It's very simplistic, but, candidly, as I look back, I was just starting out in the industry in a financial planning group at a large wirehouse at the time. We were building tools and talking about spending and these cash flows, and a very simplistic approach came across our desks. I remember, I was asked to write a rebuttal or give my thoughts. At the time, my rebuttal was, it really is better to build a plan around what somebody actually wants to accomplish rather than this rule of thumb.
Now, what I've learned in my 25-plus years of doing this, is most people have absolutely no idea what they spent. So, I actually have learned to appreciate the simplicity of what Bill Baingan was trying to solve for, which is okay, I'm not going to saddle clients with building a budget or understanding what they're going to need or how that's going to change, a lot of complexity. Let's just keep it simple and say, look, if you've been able to amass this amount of wealth, what can you initially draw out, again, rolling with inflation. So, back to that, maybe, flawed assumption, but again, conservative, that will give the highest probability that you're not going to run out of money. Again, as you say, that the 4% rule was for.
Now, what most people don't remember is, the 4% rule is not just a spending policy, it's actually an asset allocation recommendation as well. At the time, you recommended 75% or more in equities, because that's really what the target allocation should be based on how you analyze those rolling periods, through your periods that you looked at. So, we do a lot to say, look, the 4%... I think, a lot of participants and sponsors hear the 4% rule, but we try to highlight, well, you can't be on cash and support the 4% rule. You have to have an investment strategy along with that. That's really where the complexity comes in. Having that diversified strategy that's being managed over time, as well as what, we would argue, a dynamic approach to withdrawal, is going to be better in terms of course correcting. If things are challenging, pulling back, if things are great, spending a little bit more, it's going to be a more efficient use of your capital over time.
So, in theory, based on our long-term capital market assumptions, it still works. I know there's been lots of discussion about, should it be two, should it be three in a particular low interest rate environment. Obviously, we're using well-diversified portfolios, we're assuming that you're drawing down and not just losing interest in dividends to meet your spending needs. So, it still works from a forward-looking expectation perspective, but it is very flawed in how it has performed historically. So, one of the charts we have in our guide to retirement, we've looked at 63 rolling 30-year periods in time, and looked at if you had employed or implemented the 4% rule in that environments. In that inflationary environments, high inflation in the 70s, etc. So, model that pretty thoroughly.
What you find is, 84% of the time, you would not have run out of money, which is really what the 4% rule is trying to do. The 4% rule is trying to protect you and find that balance of how much can you spend with a really high probability that if really bad things happen, that you're not going to run with money. It is not an efficient spending strategy that consumes while, efficiently, to give people as much utility and spending happiness when they wanted, which tends to be early in retirement, and use capital that's been dedicated to that spend down very efficiently. Because, on the flip side, you have a one in five chance that you would have ended, across all those 30-year periods, with five times the amount of wealth that you started with. So, it's really trying to push longevity risk. It's trying to make people make a trade-off. Early in retirement, you're going to pull back to this 4% limit, and you're going to stick to it.
The risk there, is that you're telling that early retiree, when they have time, they have health, they have a bucket list, they want to do things, okay, you can't spend what you want to. Then, when you're 95, you're going to five times the amount you started with. So, that's what I mean by this inefficiency, right? What I-
Josh Itzoe: Certainly, maybe, you can use... Well, you probably can't use it, and you certainly can't enjoy it. You're going to enjoy it a lot more as, probably, 65 than 95.
Katherine Roy: Yeah, exactly. Yeah, you get much more utility, much better life satisfaction. Even giving that money away, is going to make you happier than having it at 95. So, we really think it's better for participants and individuals to think about, okay... And, I know it's tough. One of the things that we're concerned about is, I think, we see many participants and investors not consuming their wealth to enjoy their retirement because they're fearful of running out of money. I think we need to move into a world where there is an annuity or spend down price. Things that a participant can be thoughtful about. Okay, of my balance, this is the amount I feel comfortable consuming. This is the cushion, I want to always be able to maintain. Now give me a vehicle that helps me do that in a systemic way.
That being said, they're always going to need that emergency reserve. They're always going to need a liquidity pool because we know life happens. So, there's this idea of, how do I set up this systematic distribution to me through various vehicles, and then how do I make sure I keep some liquidity to be able to handle unexpected medical expenses, cars that break, those types of things, that really should be kept separate and in a pool of assets, right. An account should be available for them to do that.
Josh Itzoe: Mm-hmm (affirmative). And, be able to put some guardrails around it if you will, right.
Katherine Roy: Yep.
Josh Itzoe: One of the things you had mentioned before just in terms of this spending curve, is healthcare. You hear lots of different perspectives around healthcare. One of the statistics, I think, I've heard is that, the average 65-year old couple that retires, is going to need somewhere around a quarter of a million dollars in health care expenses. Obviously, that is... Certainly from an industry perspective, we have a vested interest in getting people to save more. But, do you find that health care... The health care costs, I think you mentioned 4.8%, on average, that it grows or whatnot.
Recently, T. Rowe Price has come out who also does, I think, some really interesting research... But, had come out, and they're actually taking a little bit of a different approach, and I'm very interested in your thoughts. But, saying that they feel like the case for healthcare costs has actually been overstated when you actually look at the data. That's the first time I've heard that narrative. Maybe, that just means I'm not... I don't read enough or listen enough. But, that seems to be countered to what a lot of the industry has been saying. So, what have you found in your research around healthcare and what the total estimated, call it, healthcare spend will be and how does that impact retirement? Income replacement and retirement spending.
Katherine Roy: Yeah, so I think health care costs are Americans number one concern regardless of where you are in the wealth and income spectrum. It feels like a big unknown, and with some of the narrative that you laid out, I do agree that we scare people. So, I really steer away from talking about the lump sum aspect of it, because it leads to really interesting headlines. One would be, women are going to pay more for health care in retirement. While that's true, it's not because women consume more health care, it's that they live longer. So, this idea that your present valuing a stream of expenses... You don't go and say to a client or participant, you're going to spend $100,000 on Starbucks in retirement. You don't present value those types of expenses, so why would we do it for health care?
So, we prefer to talk about it in annual numbers. What we find is that, consistent with T. Rowe, Medicare-related cost growth has been much more muted in the last five to seven years, and the forecast is to stay that way. We just got our new numbers for next year's guide that we're consuming and trying to digest what it looks like. We see that trend continuing. When you look historically over the last 50 years, we are in somewhat of a trough of healthcare inflation over time. So, as a result of that, we, actually, this year, in the guide, dropped our growth rate for Medicare-related costs from 6.5% to 6, just because we could no longer... When you look at that those forward trends, we could no longer really support that 6.5% growth rate.
What I mean by 6, though, is 6 is the combination of both and inflation, so that 4.8% that you mentioned, but the fact that you buy more healthcare as you get older. So, that 6% is both a combination of just how much costs are rising and how much more you're buying of health care overtime. So, that's why it's so high. So, we really think it's important for people to have that in their plan if I'm a plan sponsor and I have a record keeper that has a planning tool that, that's actually a line item so people can see those costs. Now, higher income people have it in more they save. They probably need to be thinking about this and the surcharges and some of those things coming down the pike as Medicare gets more challenged. But, I would definitely support T. Rowe's approach, or their conclusion. We're seeing that the costs not grow as quickly.
Some of that has been conjecture. The Federal Reserve has done some work. There is a demographic shift, as the baby boomers are now squarely half on Medicare and half not-ish, right? That Medicare actually is a dampener of the runaway health care expenses growth that we've seen in the past, so that obviously would be expected to continue as more and more boomers shift into that being their medical support provider.
Josh Itzoe: I'm just curious, why is that? Is that Medicare just based on reimbursement rates or something like that, where they can tap... Why does it act as a dampener?
Katherine Roy: Yeah, so it is related to the reimbursement rates that are constraining. If you're on original Medicare, for example, constraining doctors ability to charge you cost that they might be charging younger individuals on employer-based care or employer-based insurance. Medicare is not going to reimburse at those rates. The other interesting dynamic that we've heard a lot about, we learned a lot about, through our equity research team that tracks the insurers, is the fact that half of individuals going on Medicare are choosing Medicare Advantage and Medicare Advantage is more of a networked regional type of Medicare medical system.
Studies have suggested that because Medicare Advantage plans are more like HMOs, and network of hospitals and doctors, they actually are incented from a pricing perspective to produce better outcomes for their patients. So, you'll see much more preventative medicine. That's why you see SilverSneakers, and you see vision, dental and hearing often wrapped up into Medicare Advantage plans, because those private insurers are really trying to contain costs. They're really trying to shift more, again, to that preventative view. So, that's contained costs on the Medicare Advantage side as well, with some key learnings around how... If you have an individual where you have all... You have doctors in hospitals that know all of their history versus original Medicare, where I can go to any doctor in the country, who may never see the file that I... In New Jersey, have with my New Jersey doctor, I go to another doctor in Florida who doesn't have that background. The quality of care is a little bit eroded. So, I think just the sheer numbers of people on these Medicare Advantage plans is helping to contain costs as well.
Josh Itzoe: One of the things that J.P. Morgan has developed, and you guys have looked at is, really a retirement spending framework. You often care about the three-legged stool of retirement income, namely social security and retirement accounts and then personal savings. It used to be pensions factored in, and, obviously, far fewer people have pensions than maybe in the past. What is J.P. Morgan's view on that retirement spending framework? I do think that is the... I think we all realize this, but especially the defined contribution world has really been geared around accumulation. You had mentioned, baby boomers are starting to... In full bloom retiring. I think I read a statistic recently that something like 10,000 people are exiting the workforce on a daily basis. So, this needs to be able to essentially monetize this pool of assets and generate retirement income, which is a very different thing when you're just trying to accumulate.
So, the first question I have is, maybe, your thoughts around, from a practical standpoint, this retirement income framework, I think, that you guys have... I've seen you talk about. What does that look like? Then, I'd be interested in how you think, as an industry, how do we need that the... Specifically, I would say, probably the defined contribution industry... But, how does the retirement industry need to essentially evolve to move from this accumulation mindset to this de-cumulation mindset?
Katherine Roy: It's a lot-
Josh Itzoe: There's a lot of questions tied up right there. Good luck, parsing that.
Katherine Roy: Well, I think, with this shift of boomers into retirement or the demographic shift, the desire for plan sponsors to keep maybe more participants in plan to preserve pricing and buying power, as well, candidly, more paternalistic plan sponsors who really want to make sure if they've helped participants accumulate, that they can be helpful and do their best, from a fiduciary perspective to help them turn that into a paycheck, right, a post-retirement paycheck. So, I think there are a number of reasons driving that.
So, with that background, I think the other last statistic to layer on is, this cliff we're on relative to coverage in any way from a DB plan. So, I think based on limited data, today, a 65-year old has a one in two chance that they have some level of DB income. I'm not implying it's full last five years of highest earnings level of income, but they've had some exposure to a DB plan that likely was frozen that they can turn on to some degree. That's going to drop to, I think, about a third of the back-end of the boomers and then drop very precipitously for the next generation. So, I think that idea of having some sort of income floor is what we're now, I think, running square into. So, from our spending framework perspective, it's often referred to as guarantee the floor, but it's really informed by our spending research.
Now, number one, we really do believe that a guaranteed solution or protected income, particularly for individuals who only have social security, is going to be important. And, we see that in our data. You see households that have free cash flow coming in with the same level of wealth that those that don't. Their spending behaviors are very different. So, I think, participants, individuals, humans, right, we're used to having cash flow coming through our door and controlling our spending and savings to some degree. And, a lot of the mental issues and emotional issues transition into retirement without stops, back to that mechanism of generating that free cash flow we think is going to help more participants enjoy the wealth they've been able to accumulate. So, we say, a guaranteed portion for your regular expenses.
The second point I'd make on that is we're doing research right now to try to provide greater insight as to, for given levels of wealth, given areas of the country where you live, given levels of retirement income, what, from a spending perspective, are your consistent expenditures as a proportion of your total spending, and where is it variable? So, what we've tried to do is, get away from this judgmental view of discretionary and non-discretionary and have tried to shift it to consistent spending, versus volatile spending, to better inform, potentially, the amount that should be guaranteed.
So, an example of that, interestingly, that we've uncovered... And, it's not rocket science, it's obvious now that I talk about it. But, I think most people would put health care expenses as non-discretionary. They put that as, absolutely should be covered by some sort of guaranteed stream. Well, the reality is, that health care expenses are quite volatile, right? Other than your premiums and your ongoing costs for Medicare, for example, going into the hospital or having a big bill, those tend to hit all at once. So, you wouldn't want to be having that systematic payment be responsible for those kind of shocks. That's really where you need an asset management product or liquidity bucket to be able to cover those shocks.
So, we're going to try to come out with more insights related to this relationship between steady expenses, how those change over time, again, very much driven by where you live in the country and your cost of living, then, do you need more flexibility and maybe more of an asset management product. So, the guaranteed and protected portion, we think, are very much a critical component of a retirement income plan. But, we know, based on surge, the volatility, the healthcare expenses, having a portfolio that's liquid, that can be tapped, either systematically through a spend down option, or a withdrawal rate guidance that's optional for participants to take advantage of, but also a separate pool that's really dedicated for those emergency expenses or things that happen all at once, is an important third leg of that stool to have.
So, I think that lays out the importance protection for those regular expenses, having a dynamic withdrawal strategy and a portfolio for those variable systematic expenses, and, then again, that emergency reserve conservatively invested, available to meet those shocks, can be helpful over time.
Josh Itzoe: As we talk a little bit about the Secure Act, and obviously creating some safe harbors around guaranteed income, certainly, we hear a lot about protected income and these solutions, and I would argue that we're still in... I've said this on numerous podcasts, actually, because when this topic comes up is, I still feel like we're in the very early innings, to use a baseball analogy, maybe even in spring training... Not that the season hasn't even started in terms of what these products look like. But, one, do you think the... It's really interesting, one of the things I love about your research, and is informed, quite frankly, by the fact that you are affiliated with the bank. You have a window right into these spending patterns. It's not just in gross aggregate dollar spin, but you can actually see into the types of expenses that are categorized when somebody uses their credit card, if you will.
So, it's interesting between like things that people's... People will tell you the truth much better with their actions than what they say, at least that's what I've found in life. So, you hear a lot about how people want guaranteed income, and that question is posed to them. But, then you don't see, at least, so far, some of these solutions that have existed within plans, in my experience. They're not taken advantage of. So, one of the things is, what do you think... Do you think people want it more as a safety net? What do you think the investor participant retiree appetite is for actually these guaranteed solutions in terms of taking advantage of them, if they are available? Do you think there's a mismatch at all in terms of what people say they want and how they're actually voting with their wallets, if you will?
Katherine Roy: I definitely listen in on so many focus groups and try... Even partnering with ALI, the Alliance for Lifetime Income and understand the research that they've done, which I think is really fabulous. Individuals love the description of what an annuity provides. That's why I love that using the term protected income, as a way of describing what it is because that's one of the benefits that the annuities providing to you. But invariably, once you say that it's an annuity, there's this bad taste in everyone's mouth. So, I think it is, again, the features of it, what annuity provides to you that everyone finds attractive, but when you ask them, would you buy one at a particular point in time, it's very difficult for them to do that.
So, I think two things. One, obviously a plan sponsor, the fiduciary concerns, the fiduciary coverage and portability and all those different issues with making an annuity option available and plan, I think there still needs room there to provide that coverage and get people more comfortable to do it. But, even when you put it in plan, having been with a firm that did it, I think 20 years ago, the issue is, how do you encourage participants? Or, how do you facilitate participants? Either understanding how much might be recommended or advice, and that's where our research, we're hoping, can be informative there. Or, how do you buy it for them. We all know the power of inertia and the fact that, if people own an annuity, they don't want to give it up, right? But, it's that hurdle of getting to buy it, that is the issue.
So, that's where, I think, whether it is the strategies that are starting to embed the annuity into the target date fund. So, by taking some of that equity allocation, instead of putting it into fixed income, putting into an annuity product of some sort, and having them buy in over a period of time, I think gets over or could be really powerful to break through that behavioral issue, that behavioral bias. Because again, I think, if we had more participants get to retirement with greater protected income coverage, that is going to turn the tide, right, to some degree. But, the trade-off is, based on the research we've done, is by taking some of that out of the market, putting it into a new product, yes, you get more guaranteed income, but you're depressing the upside opportunity, that keeping that money invested in that target date fund for longer, could mean in terms of overall spending ability, post-retirement.
So, it's that trade-off, nothing is ever free. So, getting over these behavioral biases and buying it in a target date fund solves one issue. But, on the trade-off is, overall, maximum amount of lifetime income for that participant, is somewhat dampened as a result of that trade off. So, I think we need both. I think we need strategies that help people buy a little piece of pension as they go along. And, I think we also need good advice and structures, as a participant is making this decision. They've accumulated the wealth that they've been able to accumulate. How do I make a good informed decision about how much it makes sense to protect with the best thinking possible? And, what do other people do like me? Or, what do other people who've made this decision... What is their spending look like with similar levels of guaranteed income coverage, I think can be quite powerful in helping people make a more informed decision, a more comfortable decision, about the amount that they might want to think about putting into protected income versus keeping and more of a portfolio to be able to spend down systematically.
Josh Itzoe: Right. Yeah, I'm going to co-op protected income, if that's okay. I like that term. Similar to you, I started my career in a large wirehouse. There is absolutely a negative connotation with the word annuity. Some of its well deserved, quite frankly, right. There's some really crappy products that are out there.
Katherine Roy: And, very complex. Every time I dip into annuities now, the level of complexity and confusion is overwhelming. So, I think simplification there would be really helpful too.
Josh Itzoe: Yeah, it's interesting. So, we've done for... Again, and my co-founder, Pat Collins, who is one of the smartest, best planners, I feel like, in the industry, and, he, for a client one time, actually parsed through and read through a 500-page prospectus around an annuity and ultimately did a bunch of analysis in terms of what the guarantees would offer over even just a simple bond ladder and whatnot. Ultimately, the juice in that case, and this was a number of years ago, wasn't worth the squeeze. But, his key takeaway, which I thought was interesting is, he said, I guarantee you, no advisor or broker, whatever selling these products, knows what the heck is going on underneath it because of the complexity.
So, certainly, annuities and maybe changing the connotation... Again, some of it is well-deserved. You see some of these products where I was always taught that, the higher the commission, the worse the product, because the harder it is to sell, the longer you get locked up, right. But, things like an immediate annuity, which is really just an immediate exchange with an insurance company to guarantee a stream of income. They certainly have their place. I think the word annuity, mainly based on the product, has gotten a really negative connotation, quite frankly, in the RIA world and with fee-only fiduciary advisors. Because, quite frankly, there hasn't been a product mix. You've had these high commission products, which is definitely a dirty word in fiduciary land.
But, I do think as we're starting to see more product development that, quite frankly, are fitting into a fiduciary framework, I think, maybe, can begin to turn the tide in terms of the negative connotations. It's that one size fits all approach, right. Not every annuity is bad. There's certainly really bad ones out there. Not all of them are bad. Maybe, because of the fiduciary rules and regulations that, quite frankly, the ERISA DC world imposes, maybe that's the perfect environment to de-stigmatize the idea of protected income or the word annuity, over time. I guess time will.
It's interesting. People don't like trade-offs, even though that's, I found, the best way to educate and get people to get off the fence and make a decision, is by posing trade-offs. People, I don't think, naturally like that, because this idea of, I have to... People experience the pain of loss, right, at twice the rate, roughly, than they experience the joy of gain. So, this idea that I have to give something up. We are doing our second, we call it, seeking clarity. But, it's a financial wellness and well-being survey. We did it last year, for the first time. We had almost 1900 people take it. This year, we're a little bit less, with about 1250 people take it. But, we added a section this year on trade-offs. So, one of the things we asked was, what do people value about their DC plan the most? By far, it's their employer contribution.
But it's interesting, when you start to post trade-offs. Would you be willing to take a 5% one-time bonus in cash or retirement contribution? It heavily skews towards a retirement contribution. I think the desire for that, when you post that trade-off, is coming up. People have, based on the survey data so far that we haven't dug yet... Just starting to dig into... But, people would be are more willing now, to give up a reduction in health care. They'd rather have a higher retirement contribution than a reduction in health premiums, which I think is fascinating when you start to post these trade-offs. So, maybe that's something, as an industry, we need to do a better job of, is, we need to pose these trade-offs to help people understand.
Katherine Roy: Yeah, you can't have everything-
Josh Itzoe: The consequences of decisions, right?
Katherine Roy: If something sounds too good to be true, it usually is, right?
Josh Itzoe: Right.
Katherine Roy: Also, I like your... Those two data points that you just shared, are very counter to what the history has been. So, that's great news that the tide may be turning in terms of really valuing those retirement benefits, which is, I think, really great news and a great insight.
Josh Itzoe: Yeah, it'll be interesting to see. And, even things like bonuses or even income, it's interesting, one of the questions we posed is, would you be willing to take 5% less in compensation for a 5% retirement contribution? Part of this is, trying to create utility for our plan sponsor clients to say, look, the end of the day, the cost impact to you is neutral, right, if you give somebody... You were going to give them a 5% raise, and you decide to give them a 5% return contribution, it's kind of, neutral. But, it's interesting, that what it seems like is, at 5%, people are willing to take the retirement contribution, and that percentage starts to go down as it goes to 10% and 15%. 15%, people want the cash at a much higher rate.
It's fascinating, some of these trade-offs. I do think retirement, I think, because probably plan sponsors have focused so much on health care, and have really gotten their plans, quite frankly, probably into pretty good shape, it seems like the tide is turning and now the shift... Employees are starting to say, okay, well, I feel good about my health care, now, I want to focus on retirement. So, it'll be interesting, just in terms of that trade-off data.
What do you think in terms of... You had mentioned earlier, which I totally agree with, and I think the research, especially at the top in the largest plans... I've seen a shift, I think the data supports this, is that large plan sponsors more than I've ever seen in the past, are interested in keeping assets in the plan, post-retirement. I think even smaller companies as well, but, at, maybe, a less of a clip. What type of plan design strategies do you think employers should consider adopting in order to accomplish that if they're serious about keeping plan assets, post-retirement, in the plan? How do you think plans need to change in order to accomplish that, if that's an important goal for plan sponsor?
Katherine Roy: Yeah, I really think establishing what many are referring to as returning from tier or this idea that there are investments and options that you want to make available to participants as they approach and live in retirement. That may be different from what you might want in the core menu. Whether you can create a different experience for that type of participants, so it's clear that these are the right options for them. We know that you can limit access to investments as long as that doesn't... Or, an investment choice, as long as that doesn't discriminate. So, obviously, if you have a very diverse workforce, you could take advantage of that option. What I mean by that is, only allowing access to an annuity option to people 50 or over, 55 or whatever age you want to decide that as a plan sponsor as fiduciary, but obviously taking into consideration the discrimination testing implications there.
I think I always go back to that participant you. So, when we look at the types of participants that are likely if they do stay in plan, what their trajectory looks like, and what investment options are best aligned to their outcome, we see really four different very distinct profiles. So, the first profile is probably not a likely candidate to stay in plan and is not what I would encourage plan sponsors spend too much time, but that's really the rising wealth type of participants. So, they're going to spend what they're going to spend, their account value is going to be higher, at the end of the year, it's going to keep growing. That's likely a participant who's going to move out of plan, work with a financial advisor, and that's an estate planning issue. If you did want to have an investment option for that participant, it'd be total return. Now, how do you maximize for that next generation type of idea.
But, the other three, I think, really are important profiles for plan sponsors to understand the propensity for their participant-base to fall into one of these three, and then what investment options make the most sense. So, we see profile number one that is a priority, would be that preserve principle type of participant, so that participant... I think this idea of, I don't my account balance to go down, I just want to generate current income enough for me to be able to spend, I'll constrain my spending to be able to do that. That is an emotional and behavioral, I think, driven profile to a greater degree than really an estate planning goal, right? I think when I started my career, this idea of preserving a principle and giving it to the next generation, was very much a priority of many households that we worked with. Now, I think it's coming out of fear and this desire to hold on as much as you can. And, I think that's also a byproduct of the fact that we've always communicated retirement account balances as account balances rather than as an income stream, which is really what they're intended to provide.
So, for that participant, though, if they're going to sit in that pool, they need current income. So, total, multi-asset solutions that are generating as much income as possible, equity income solutions, things that are generating as much current income, without putting a higher degree of that much higher risk on that participant, I think is important. We know that dividend paying stocks can be really good until they're bad and are producing that level of income, so having some options there, I think can be helpful.
Then, the other two profiles are one, the partial drawdown participant. So, that participant, really, to augment their lifestyle, they're going to need to spend a portion of their wealth, for them, a systematic withdrawal plan. Obviously, you're seeing growing numbers of these types of solutions that combine an asset allocation with withdrawal rate guidance or distribution to participants on that amount of wealth that they want to spend down, that would be a good solution for that participant. Then unfortunately, we do have some inadequate savers and long lifers who have a high likelihood that they're going to run out of money with what they've been able to accumulate, and, really, for them, protected income is going to be the most efficient way for them to get the most income as they possibly can with the amount of wealth they've been able to generate.
I think even though those four profiles layout, high-level asset class or asset strategies or investment strategies that make the most sense, I think, for those last two profiles, a combination, as we've talked about, is going to be ideal, particularly for that partial drawdown participant, how much should be guaranteed, how much should be in that drawdown product is, again, where we spent time on the advice front there and helping that participant make a decision.
I think it's twofold, right? As a plan sponsor is, how do I make sure I have those investment options available to my post-retirement or my retiree cohort? Then, it goes back to what we've covered. How do you get those used in a prudent way? Is it advise through an advisor? Is it a tool where they can make an informed decision about how to combine these investment vehicles for their unique situation, which is why de-cumulation is so hard. It isn't just all about saving and diversified strategy, it's, my needs are unique and I need to figure out how much I want to dedicate to these various solutions. So, whether it's an advisor or tool, or whether it's embedding that in that target date fund, or in a solution, is the second step that I think plan sponsors need to think carefully about. So, they're not only just providing the right options, but they're making sure they're used in the best way possible for those participants who are staying in plan.
Josh Itzoe: It's interesting in the industry, you hear a lot about the need to expand coverage.
Katherine Roy: Yeah.
Josh Itzoe: Right. That more people have. We're seeing some things, just from a statutory perspective, of state run plans to expand coverage and whatnot. I've talked about this before on the podcast, as I mentioned, Kitces and I had a great discussion about this. But, of the things is that we need to expand, not just coverage so people can save but, I think, expand access to advice. Right now, there's a real small percentage, quite frankly... A small percentage of Americans who have the means, the wealth, to really access good, fiduciary base, but also sophisticated advice. You have this huge swath of Americans who, quite frankly, don't meet the minimums of many firms, don't have enough money. So, I think one of the challenges, as an industry, we need to figure out how we can bring real planning to the masses. Easier problem to solve, or hard problem to solve from that perspective.
But, I do think, that is... We're seeing more and more whether it's with financial wellness programs, and what that looks like, is that is such a... I view financial wellness, like I view annuity as, it could mean all kinds of different things. You get a lot of different answers to what wellness is.
As we wrap up, though, I want to pose two final questions to you. The first is this, is, how do you see the nature of retirement changing over the next 5 to 10? years? What is retirement going to look like over the next 5, 10, 15 years, let's say. How's it going to change? How's it going to evolve? How's it going to stay the same?
Katherine Roy: Oh, wow, that's a good question. One, I hope that we do make progress on this retirement income conundrum. I started focusing on retirement income in 2003. So, it's almost 20 years ago, where we knew baby boomers are going to be retiring, and how are they actually going to construct their retirement income plan, and I think we've made some progress. But, I do think, with data, with user experiences that we can construct with, potentially, the ability to give more advice and guidance in the space, I think we can really make strides in developing well thought out retirement income plans for more participants and then investors. I think, hopefully, that's number one.
I think the other thing that we're seeing in our data is, increasingly, retirement is not, at least at the household level... It's not, I stopped working one day, and I am fully retired the next and I started on my retirement income. We actually see almost 50% of our households who started retirement income, still have some level of work income coming into the household. So, that could be a spouse, right, continuing to work and one is retired. As an example, it could be the same person having some work income continue and starting retirement income. So, I think we want to get smarter about that transitional period, and how do we really understand what the goal of that household is, because when we do qualitative data around that, particularly for lower affluent households, that's been their plan. That one person is going to continue to work for a longer period of time, or there's an age difference within the couple. So, how can we start being better informed in the 401(k) world with not just what's happening in the 401(k), but what does it mean from a household perspective and the overall households preparedness for their retirement? How do we do a better job of doing that?
So, I think, better retirement income plans, and options and strategies and clarity and plan, I think, is number one. Number two, being more informed about how individual participants fit into a household structure and what the real retirement preparedness picture looks like. Is it as dire as maybe you mentioned at the beginning? Is there a crisis? Or, is it because we're smarter about all the different dimension that retirement means. Social Security, a 401(k), work as an option? Are Americans really putting those pieces together more successfully than we think today?
Josh Itzoe: Excellent. So, the last question I have for you, as we finish is, the purpose of this podcast, of the Fiduciary U™ podcast, is to make an ERISA fiduciary smarter. One of the questions I like to ask every guest at the end is, if you could offer only one piece of advice to ERISA fiduciaries, maybe that's a plan sponsor, committee members, a fiduciary advisor, what would be your best piece of advice for ERISA fiduciaries?
Katherine Roy: So, I come back to, have you defined well, the problem that you're trying to solve, and are you measuring the success of your plan against solving that for that outcome? Because, I still think that we're in a world where... And, our own plan sponsor surveys show this, where plan sponsors want to be getting more participants cross the finish line, which is our goal as well. But yet, when you look at how they're measuring their plan, they're still looking at contribution rates in aggregate, they're still looking at diversification at the plan level, not down to a more granular level. And, they're not putting that together to really measure and benchmark themselves as to whether they're, as a fiduciary, making decisions in the plan. It's really helping them accomplish the outcome that they want their plan to achieve.
So, I think shifting or thinking about or helping plan sponsors, being much more thoughtful, not just about the outcome, but the measurement and how they're actually holding themselves accountable for achieving the outcome that they want, is something I encourage more advisors to help plan sponsors do.
Josh Itzoe: I think that is great advice. If you don't know what problem you're trying to solve, you're in trouble. It is interesting, some of the antiquated... Actually, it, I think, speaks to the point that we talked about a little bit earlier, is that, in a purely accumulation world, and where that's really the goal, right, is... Not to diminish the importance of participation and contribution rates, because those are critical, but they take much more of a focus as inputs, as opposed to what I think you're talking about, as more of getting people across the finish line, heavily influenced by things like participation and contribution rates, and fees and rates of return. But, those things don't stand alone, right, they have to be weaved into... They influence what that outcome looks like. So, I think that's great advice.
I have really enjoyed our conversation today. I think, you and your team have incredible insights about retirement in general. I think, in particular, you are very gifted in terms of being able to talk about these things in both a sophisticated way, but in a simple way, as well. I just really appreciate you taking the time to be a guest and sharing your ideas and your thoughts with my audience. So, thank you so much.
Katherine Roy: Thank you. I've enjoyed our conversation. You ask really good questions. So, thank you.
Josh Itzoe: I don't have any answers, but I try to ask decent questions. So, thanks so much.
Thanks for listening to today's episode with Katherine Roy from J.P. Morgan. I hope you enjoyed our discussion and feel like you're in a better position to understand the evolving retirement income landscape. If you'd like more information or to learn more, go to www.fiduciaryu.com. I've got some great resources there for you, including each episode along with show notes, articles, free tools, and online courses. Make sure to sign up on the site so we can stay connected. I'd love to help you stay in the know about what's happening in the world of corporate retirement plans. If you've got questions you'd like me to answer, topics you'd like me to discuss, guests you think would be a good fit for the show or any other feedback, I'd love to hear from you.
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